Dive Brief:
- The Cass Freight Index's July 2017 report marked a sharp dip in trucking shipments and expenditures after seven months of strong growth.
- Shipments and expenditures decreased by 3.2% and 1.5% respectively, although YoY growth increased by 1.4%.
- The report stated that the dip could be attributed to "normal seasonality," and concluded that although the dip is troubling, it's unlikely that the trucking industry will decline from here, as YoY growth is still positive.
Dive Insight:
Although July's YoY growth wasn't as strong as June's — which clocked in at 4.5% YoY — it's still positive, which is why the industry is confident that trucking will continue to grow through 2017. But even though July 2017 was stronger than July 2016, growth was weaker than July 2015, 2014 and 2013.
The Cass report stated that the industry has definitely pulled out of the recession experienced through October 2016, and because July is a seasonally weaker month, the report said "we are hesitant to draw a negative conclusion." Because fuel prices rose steadily for the past nine months, the Cass report said they probably positively affected trucking growth.
According to the report, shipment volumes "associated with e-commerce continue to show outstanding growth," and because volume directly correlates with pricing, that's why the Cass Index is confident 2017 will ultimately be a strong year for the trucking industry.
The American Trucking Association (ATA) also recently released its July Truck Tonnage Index, reporting that trucking tonnage increased 0.1% in July, which is a 4.4% decrease since June. Because the trucking industry is considered to be a good gauge of the overall economy, ATA Chief Economist Bob Costello said the July numbers make sense: "Retail sales surprised to the upside, but manufacturing production and housing starts were down, so combined those likely caused a rather flat month in July for truck tonnage."
But Costello also said shippers, carriers and consumers should expect "moderate" growth throughout the rest of 2017. As the Cass report stated, one weak month isn't enough to infer a decline in the industry. On the contrary, a dip during an off-season month is normal.
"August and September data will give us a better indication of whether this is a deceleration or simply a pause in an otherwise improving trend," the Cass report stated.
